Role of Hydropower in New England’s Energy Future

Jeffrey A. Leahey, Esq.

Sr. Manager of Government Affairs

National Hydropower Association

Washington, DC

Jeff@hydro.org

Environmental Business Council 2009

Hyd

ro 8

%

Largest U.S. Renewable Resource

Coal 49%

Nat Gas20%

Nuclear 19%

Hydropower generates 8% of all U.S. electricity

Oil 1.6%

Others 3%

Hydropower accounts for about three-quarters of all U.S. renewable energy generation

Why Hydro Matters

U.S. Department of Energy’s Energy Information Agency Report:

Emissions of Greenhouse Gases in the United States 2007 attributes much of the 86 million metric ton increase in U.S. carbon dioxide emissions between 2006 and 2007 to “…a drop in hydropower availability that led to greater reliance on fossil energy sources (coal and natural gas) for electricity generation, increasing the carbon intensity of the power supply.”

The report added that a 14 percent decrease in hydropower generation over the last year – attributable mainly to drought conditions in the South – “more than offset” increases in generation from wind and nuclear power plants.

Hydro’s Potential

96,000 MW+ more by 2030

96,000 MWnow

Hydro can double

FERC Sees It, too

FERC’s Jon Wellinghoff has challenged NHA members to double capacity by 2030

Record 34,000 MW new in FERC pipeline today

Where EPRI Sees It Growing

Gains at existing facilities:

4,300 MW+

New small

36,000 MW

Ocean20,000

MW

Hydro-kinetic &

tidal12,800

MW

Low-power

facilities22,000

MW

PumpedStorage

???

This requires…

Federal tax incentives, policy & R&D support

Spreading the Word on Hydro

NHA Executive Fly-in• Two dozen executives participated in the event

the first week of March

• Meetings with the White House, FERC Commissioners, and with Congressional Members and staff

• Messages received:

• Hydro’s clean air benefits important

• So too are the job creation benefits

• Ability to integrate other renewables even more important

• Hydro industry needs to be more visible

PTC extension

CREBs extension More hydro covered

in tax incentives

Growing support for R&D

2009 Stimulus Bill Scorecard

Tax Incentives

Production Tax Credit (PTC)• 3-year extension through Dec. 31, 2013

• Long term extension provides the time for hydro projects to go through licensing, order equipment and construction

• Hydro receives half-credit (1 cent per kwh)

Eligible hydro resources• Capacity additions at existing facilities

• Efficiency improvements at existing facilities

• New development at non-powered dams

• Hydrokinetics - ocean, tidal, in-stream and conduit power

Tax Incentives continued…

Investment Tax Credit (ITC)• 30 percent credit in lieu of the PTC for facilities

placed in service in 2009-2013, at the time facilities brought online

• PTC eligible hydro resources included

• NHA advocated for the longer 2013 extension

Department of Treasury Grants• Grants cover 30% of the cost of a renewable

energy projects that commence construction before Dec. 31, 2010.

• Grant period terminates on January 1, 2014

• In lieu of PTC or ITC

Tax Incentives continued…

Clean Renewable Energy Bonds (CREBs)• $1.6 billion re-authorization

• CREBs eligibility for hydro projects mirrors the PTC/ITC

• Orig. round of applications saw high demand and larger hydro projects were cut out.

Advanced Energy Investment Tax Credit • 30% credit for manufacturers to re-equip, expand or

establish a renewable energy manufacturing facility

• Original language only included solar, wind and geothermal

• NHA sought inclusion of “other renewable resources” to include hydro and hydrokinetics

Hydro Investment Provisions

DOE Waterpower Program• $2.5 billion overall for DOE EERE programs

• Additional Omnibus Appropriations funding for the Waterpower program of $40 million.

• For FY2010, NHA requested $91 million.

• Several industry funding opportunities issued.

DOE Electric Reliability Program

• $4.5 billion in new program funds

• To modernize the grid, enhance security and reliability of the energy infrastructure, energy storage research, development, demonstration and deployment

• Key role for pumped storage hydro projects

Hydro Investment Provisions

DOE Innovative Technologies Loan Program

• $6 billion in additional funds

• Funds for rapid deployment of renewable energy projects, including hydropower, hydrokinetics, and pumped storage, as well as electric power transmission systems.

• Construction must commence by Sep. 30, 2011.

Army Corps of Engineers• $2 billion of funding for activities including

upgrading of Corps hydro projects

Congressional RPS Proposals

Representative Ed Markey (D-MA)• Chairs Energy and Environment Subcommittee of

House Energy Committee & Global Warming Select Committee

• Definition of renewable resources includes: incremental hydro, development at non-powered dams, and ocean, tidal, in-stream

• Additional deal with moderate Dems to gain support: Incremental hydro and power at non-powered dams brought online since 1992 considered as new and qualifies under the RES.

Hydro Investment Provisions

Senator Jeff Bingaman (D-NM)• Chairs Energy and Natural Resources Committee

• Definitions follow the Markey bill including the 1992 deal.

• Sen. Murkowski, ranking Republican on the Energy Committee, secured agreement with Sen. Bingaman to expand the definition of qualified hydro resources to include additional Alaskan resources – small hydro, pumped storage, Alaskan lake taps.

• Other resources under discussion include low impact certified hydro, hydro used to firm intermittent renewables, small hydro.

Congressional Climate Proposals

HouseEnergy Committee Chair Waxman (D-CA) has proposed

combined energy policy and climate bill by Memorial Day. It includes:

1. clean energy title: promotes renewables, CCS technologies, low-carbon transportation fuels, clean electric vehicles, the smart grid and electricity transmission;

2. energy efficiency title: to increases energy efficiency across all sectors of the economy;

3. global warming title: places limits on GHG emissions; and

4. transitioning title: protects consumers and industry and promotes green jobs during the transition to a clean energy economy.

Congressional Climate Proposals

Additional Details of House Bill

Reduce carbon emissions 17% by 2020 and 80% by 2050 compared to 2005 levels.

Approximately 80% of allowances freely distributed. By 2031, 70% of allowances are auctioned.

Allowances to states for investment in renewable energy

Allowances provided to local distribution companies

50% based on historic emissions

50% based on annual average retail electricity deliveries

Congressional Climate Proposals continued…

Senate

Situation is more complicated in Senate because of multiple jurisdictions – Energy (Bingaman) and Environment & Public Works Committee (Boxer).

Had looked like climate would have to move separately from an energy bill in Senate.

However, Boxer is closely watching what the House is doing and has stated she plans to mirror that compromise closely, in order to try to move something.

Final adoption on climate legislation this year is still an uphill battle.

Congressional Climate Proposals continued…

NHA’s work• Not directly engaging in the allowance

allocations debate – historic emissions vs. output

• Working to ensure that hydro and hydrokinetics do receive allowance value

• Ensuring the definition of renewable resources includes hydro and hydrokinetics

• Supporting the renewable energy bonus allowance program, which would set aside an amount of allowances that would go directly to renewables

• Supporting other clean energy programs in a climate bill that help develop and deploy renewables, including hydro and hydrokinetics

THE END!

Questions???